1990 (7) TMI 7 - HC - Income Tax

Summary

Issues Involved:
1. Legality of the final order of detention dated March 5, 1990.
2. Computation of the six-month detention period under Rule 77.
3. Appropriate final orders to be passed by the court.

Issue-wise Detailed Analysis:

1. Legality of the Final Order of Detention Dated March 5, 1990:
The petitioner challenged the final order of detention in civil prison dated March 5, 1990, issued by the Tax Recovery Officer under Rule 76(1) of the Second Schedule to the Income-tax Act, 1961. The court examined whether the conditions precedent under Rule 73(1) read with Rule 76(1) were satisfied. The court found that the Tax Recovery Officer failed to record the requisite satisfaction under Rule 73(1)(a) or (b), which mandates that the officer must be satisfied that the defaulter either dishonestly transferred, concealed, or removed any part of his property or had the means to pay the arrears but refused or neglected to do so. The court concluded that the impugned order dated March 5, 1990, was null and void as it did not comply with the conditions precedent, making it ultra vires Rule 73(1).

2. Computation of the Six-Month Detention Period Under Rule 77:
The petitioner contended that the six-month detention period should include the time spent in interim custody from December 30, 1989. The court examined Rule 77, which prescribes a maximum detention period of six months for demands exceeding Rs. 250. The court held that the six-month period starts from the date of the final order under Rule 76(1) and does not include the period spent in interim custody under Rule 75 or interim arrest under Rule 73(2). Therefore, the six-month period would start from March 5, 1990, and end on September 4, 1990.

3. Appropriate Final Orders to be Passed by the Court:
Considering the court's conclusion that the impugned order was null and void, the petitioner sought immediate release from civil detention. However, the court noted the peculiar facts of the case, including the petitioner's status as a Pakistani national involved in gold smuggling and the potential loss to the public exchequer if he left the country. The court directed the Tax Recovery Officer to issue a show cause notice to the petitioner and hear him within two weeks regarding the need for continued interim custody and the final order of detention. The court ordered that the petitioner remain in interim custody for two weeks and directed the Tax Recovery Officer to pass appropriate orders under Rule 75 and Rule 76(1) read with Rule 73(1) within this period. The court clarified that any final detention order would be limited to the period ending on September 4, 1990, and subject to challenge by the petitioner.

Conclusion:
The court quashed the impugned order dated March 5, 1990, and directed the Tax Recovery Officer to conduct a fresh inquiry and pass appropriate orders within two weeks. The petition was partly allowed, with specific directions for interim custody and the timeline for the final order. The rules issued in Special Criminal Applications Nos. 157 and 387 of 1990 were discharged.